How can I improve my credit scores in a short time?
I have been looking for my first home since Jul 07. My credit score is about 704 - 712 for first times, 684 in Oct and 660 in Jan 08.
I wanted to compare rates from 3 other lenders to get the best deal i.e. the lowest monthly payment and closing costs. We haven't got the house yet but approval letters are expired and every time is renewal, credit reports are pulled out. I have 2 cc but just use one, being easy to control; the other has longer age but not use and a car loan since Oct 07, never had late payment or collection debts.
The only thing I think my score went down is too many inquiries (in different periods) and new car loan. Is there anyone know how to increase scores in a short time (I really want a house now) ? And anyone has experience about getting good payment but not hurt your credit?
I am a newcomer in US. Then any your ideas are helpful to me. Thanks in advance!
Re: How can I improve my credit scores in a short time?
Hi Khit! welcome, and good luck!
Simply to retain or improve FICO, dont let any current payments go late, and dont apply for new credit other than your mortgage unless you absolutely need to. Looking for a new car loan at the same time that you are seeking a mortgage wont help, for they dont know what your debt will be, and see that you are seeking more. Your FICO score of over 700 should entice any mortagage officer to seriously consider your application. But mortgage lendors do NOT consider or grant mortgage loans based solely on a one-dimensional FICO score. It is but just one factor. FICO does not take into account many factors that are important to them. Take for example your current income, or your current total obligated monthly debt, including things other than CRA reported loans and CC's, and thus your debt-to-income ratio. The income, debt, and credit rating of any co-signor on the loan. How long have you lived where you are? Your FICO score does NOT consider your income, your employment history, stability, debt-to-income ratio, etc. So dont be totall fixated on FICO when it comes to a mortgage loan application and approval. Talk to the loan officer. Most of FICO is based on revolving credit history, which is unsecured debt, and not what you are seeking. A mortgage loan is secured debt, and thus is subject to review by mortgage lendors after consideration of many factors other than sterile FICO scores.
Don't let lenders pull your reports until you're ready to buy
One thing you might consider is running your own scores - get reports from all three CRAs the day you start shopping for your loans. Provide copies of the reports to the lenders, and instruct them to NOT pull your reports, but use the reports you provide as the basis for their estimates. Just tell them that you don't want hard pulls on your credit in case the deal on the house you're looking for doesn't go through. (I just had 2 deals on a house fall through at the last minute - and then had to wait a month before we found the next home we wanted...).
When lenders pull your reports their pulls (within a 30 day period) are combined, so they all only hit your score once, but it sounds like you've had a few pulls already this year, and more will just make matters worse. If you pull your own score it doesn't ding your scores.
Multiple hard pulls can drop the score by quite a few points. I'm not sure how much the car loan may have impacted your scores, but I only had 2 hard pulls last year, and when one dropped off, my score went up by 4 points. The impact is greater the more pulls show up.
Other should have more (and probably better) insight, but the only way I know of impacting the score quickly is paying down utilization on your revolving accounts - if anything is over 10% (and especially over 30%) you'll get a good boost by ensuring it gets under 10%. And if you have any bad marks (like a late payment), getting those removed can have a big impact depending on how old they are.
As Robert said, FICO scores aren't the only thing the lenders look at. Mine aren't all that great at right around 700, but the rates I've been quoted all are below what all the sites say I "should" expect with my scores. In fact, my lenders indicated that my score changing from 682 to 700 really didn't change the applicable rates. But I'm going in with 27% down, 14 months reserves, and a low DTI.
Message Edited by WAFICOwatcher on 01-31-200803:26 PM
Message Edited by WAFICOwatcher on 01-31-200803:31 PM